Community Enforcement of Trust with Bounded Memory

• 成果类型: Article
• 署名作者: Bhaskar, V; Thomas, Caroline
• 署名单位: University of Texas System; University of Texas Austin
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdy048
• 发表日期: 2019
• 页码: 1010-1032
• 关键词: repeated prisoners-dilemma; repeated games; COOPERATION; equilibria; EFFICIENCY; MARKET; MODEL; folk

摘要

We examine how trust is sustained in large societies with random matching, when records of past transgressions are retained for a finite length of time. To incentivize trustworthiness, defaulters should be punished by temporary exclusion. However, it is profitable to trust defaulters who are on the verge of rehabilitation. With perfect bounded information, defaulter exclusion unravels and trust cannot be sustained, in any purifiable equilibrium. A coarse information structure, that pools recent defaulters with those nearing rehabilitation, endogenously generates adverse selection, sustaining punishments. Equilibria where defaulters are trusted with positive probability improve efficiency, by raising the proportion of likely re-offenders in the pool of defaulters.